Ways big businesses make money that small businesses can’t

The following are some ways through which big businesses profit, whether directly or indirectly through cost savings, that are unavailable to small businesses.

By extension, the same points offer a glimpse into the scale that small businesses must attain in order to truly profit.

Government subsidies

There is no better litmus to understand government subsidies than a particular American ecommerce giant that pays its workers such low wages that they rely on top ups by the government to get by their weekly expenditures.

In other words, the business savings made by having the government pay a recurring portion of the workers’ wages is the profit.

The types of grants and subsidies one would understand better are the one off disbursements. But the example above clearly explains how government money contributes directly to big business profits.

Customers asking for discounts from mom and pop stores

For a comparable item, customers cannot simply ask for discounts from a faceless store attendant who merely scans the barcode. However, what is also true is that, in fact, most customers never found it necessary to ask for it even though the price may be higher.

On the other hand, that discount given by the average small business is a setback to staying afloat.

More free advertising via more word of mouth

In comparison between small businesses to small businesses, the business that secures greater exposure via personal family and friends’ word of mouth, compared to the business that is unable to tap on that energy, makes that additional profit, which in turn contributes to the propensity to enjoy the lifestyle associated with a successful business.

However, there is a stark difference between the paltry help received from personal relationships of small business owners, compared to the countless free advertising dished out by the wider general public for business giants. Think fashion giants, ecommerce giants, or tech giants constantly being talked about in private conversations.

Support local? You may not need the product or service. But just sharing their social media page or clocking traffic on their websites help tremendously. Thank you on small businesses’ behalf.

Any paid advertising, on top of free advertising by the public, by big businesses is for the purpose of competition with other businesses of the same scale. It is not for the purpose of outcompeting small businesses.

While small businesses pounce on every opportunity to persuade that one more close friend, family member, and cherished customers to share for them, big businesses scoffs at them: amateurs.

Actually, they don’t. They are profiting way beyond in terms of advertising savings to even care.

Media coverage

A for-profit commercial version of the same point above. For content generation purposes, the unpaid occasional coverage by media companies of small businesses is, well, but occasional.

Monopoly

Higher prices due to demand and supply

Cheaper loans for bigger quantum

Business profits, outside of wages. While in most cases, small business profits almost equate to the owners’ wages

Related

Unless one’s business is fully digital and can work from home, the small business owner requires space for operation. “Entrepreneurship” has taken on a badge of honour, and that persons who eventually succeed have surmounted an incredible amount of risk. Among those risks is the exorbitant land cost, i.e. rent or mortgage, that one needs […]